"When he became Labour leader, Tony Blair understood what Margaret Thatcher had done to change the country," he says. "The Conservative Party has to understand why it has lost three elections in a row and what Blair has achieved over the last eight years. We can't turn the clock back to 1997 and pretend it has all been a bad dream."

Mr Cameron, the shadow education secretary, makes his comments as he and the only other remaining candidate in the contest, David Davis, tour the country wooing the grassroots activists who will vote in the final round.

His views will infuriate some traditionalists but he says his party must move into the 21st century to survive.

"There are some in the party who believe that the pendulum will swing back," he says. "But the Conservative Party has no right to office. It exists because it has principles and ideas and policies that attract people."

Mr Cameron, the champion of the modernisers, says: "Margaret Thatcher did amazing things for Britain but there will be a new generation of voters at the next election who were born after she left office. We are facing a new era and we must respond to it."

He adds: "There is an attitude among some that all the Conservative Party has to do is to shout a bit louder and hate modern Britain a bit more and everyone will come rushing to the standard - and I just think that is not part of the problem; that is the problem."

Mr Cameron denies that he is "a Tory Blair" and says that the Labour leader has "done more harm than good", handing powers to Brussels, heaping more bureaucracy of business and raising taxes.

However, he says the Conservatives must recognise that "there are some things Blair has done that are good". He cites the city academies programme as an example.

He agrees with the Prime Minister that public service reform must be a priority but adds: "What we have seen from Blair are terribly timid reforms. . . [He] is not doing what he says he wants to do with public services. Gordon Brown won't let him; the trade unions won't let him."

Mr Cameron says he could never be the next leader of the Labour Party because "there are two sorts of people who go into politics: those who want to tell people what to do - Tony Blair and the Labour Party - and those who want to set people free - David Cameron and the Conservative Party."

"You should never fight a battle you are going to lose," he said during a visit to Warwick University.

An ICM poll of floating voters for The Guardian today shows that 48 per cent would prefer Mr Cameron to be the next prime minister, while 33 per cent want Gordon Brown. But among voters as a whole, 43 per cent backed the Chancellor, while 38 per cent favoured Mr Cameron.

"I had an air of ancien regime about me and obviously there is now an enthusiasm to move on," he says.

Mr Cameron has attracted the backing of Lord Heseltine. In an interview for tomorrow's GMTV Sunday Programme, the former deputy prime minister says: "David Cameron is the message. His ability to communicate with the wider public is part of his appeal."